Mining News

New Hope for Mining Investment in Nunavut

It appears that Nunavut’s mining sector may be picking up, with renewed interest in developing the region’s Hope Bay gold project. TMAC Resources Inc. issued a press release in early June outlining their plans to engage in this opportunity. The company is issuing an IPO with an interest in using the funds to develop the Hope Bay mine to what they see as having profitable potential.

The Hope Bay project involves three gold deposits titled Doris North, Madrid and Boston. The mine is expected to produce an average of 160,000 ounces of gold a year at very low all-in sustaining costs of US$785 an ounce. This is according to pre-feasibility documents released six weeks ago by TMAC.

TMAC is not the first mining company to explore the Hope Bay Project. Their investment in developing the project follows after other junior mining companies have failed to establish economic feasibility within the region.

In 2010 Newmont, a major US mining company based in Colorado, expressed interest in developing this project, valued at the time at $1.6 billion USD. Newmont shut down their progress with the mine in 2012 due to economic feasibility issues.

TMAC is keen on taking over where Newmont left off.

The feasibility troubles faced by Newmont highlight some of the barriers to investment in Nunavut that other mining companies have faced. These are identified in the Fraser Institute’s 2014 Survey of Mining Companies, a composite survey looking at responses from senior mining executives in 122 jurisdictions.

Under the category of quality of infrastructure in Nunavut, 33 percent of respondents indicated that the quality would pose a mild deterrent to investment, 49 percent claimed perceived it to be a strong deterrent to investment and two percent indicated they would not invest in the region because of that factor.

With the introduction of new project investment, and securing companies such as TMAC to invest and develop them, infrastructure investment could follow. This increase in investment could help combat the infrastructure barriers that the survey reflects as a considerable deterrent to investment in Nunavut’s mining sector.

Survey respondents also expressed concern under regarding regulatory duplication and inconsistencies. Here, 41 percent of respondents perceived this is a mild deterrent to investment in Nunavut, with 15 percent indicating that it is a strong deterrent to investment. Of the responses, the remaining 44 percent indicated it either encouraged investment or was not a deterrent.

Under the category of uncertainty over which areas will be protected (hence off-limits to mining), 38 percent say that it is a mild deterrent to investment, 20 percent indicate that it is a strong deterrent and 2 percent would not invest in Nunavut because of this uncertainty.

TMAC’s proposed entrance into Nunavut could have considerable impact on investment in the territory; however it is too soon to speculate on how much and if it will be lasting.